Top lawyer and trader 'would have made Gordon Gekko proud'

A top lawyer and a New York trader accused of insider trading used tactics
that Gordon Gekko, the fictional star of the movie Wall Street, would have
been proud of to cover the tracks of their $32m (£19m) ring, prosecutors
claim.

Michael B. Ward, the FBI agent in charge of the case, said that "the subjects in this case allegedly attempted to cover their tracks with the tradecraft of which Gordon Gekko would have been proud."

Matthew H Kluger, a top mergers and acquisitions lawyer, and Garrett D. Bauer, a self-employed trader from New York, are alleged to have used inside informationgleaned by Mr Kluger from his work to make millions.

US prosecutors allege that Mr Kluger, who worked at a string of America's most prestigious law firms, passed on information to an unnamed co-conspirator who then passed it to Mr Bauer to trade on. The two men, who were arrested earlier this week by agents from the Federal Bureau of Investigation and the Internal Revenue Service, are charged with securities fraud.

"The defendants exploited Kluger's access to sensitive, confidential information to make trading profits a sure thing," said Paul Fishman, the state attorney for New Jersey. "This kind of cheating corrodes confidence in our markets and swindles those who play by the rules," he said.

The two men are alleged to have traded ahead of 11 deals, largely involving technology companies including SunMicrosystems, McAfee and 3Com, between April 2006 and February of this year.

Mr Kluger most recently worked in the Washington DC office of Wilson Sonsini Goodrich & Rosati, one of the biggest firms in Silicon Valley. Though prosecutors claim that 50-year old Mr Kluger began passing on confidential information as early as 1994, when he worked at the New York firm of Cravath Swaine & Moore.

On leaving there in 1998, he was then employed at Skadden Arps, Slate, Meagher & Flom, one of Wall Street's biggest firms, until 2001.

The case is the latest evidence of the US government's attempt to tackle insider trading on Wall Street. This week prosecutors finished presenting their case in a New York court against Raj Rajaratnam, a hedge fund billionaire accused of making $45m through running an insider trading ring. Mr Rajaratnam has denied the charges.

In the case of Mr Kluger and Mr Bauer, prosecutors allege the two men took increasingly desperate measures to conceal any trail of their activities.

Mr Bauer, claim prosecutors, destroyed one mobile phone they used to talk on and disposed of it in two separate rubbish bins in a New York branch of McDonalds. The unnamed co-conspirator was also instructed by Mr Bauer to destroy $175,000 of cash because it may have had his fingertips on it.

Michael B. Ward, the FBI agent in charge of the case, said that "the subjects in this case allegedly attempted to cover their tracks with the tradecraft of which Gordon Gekko would have been proud."

In one of a series of calls mentioned in the complaint by prosecutors, Mr Bauer is alleged to have said "I can't sleep. I can't sleep. I am waiting for the FBI to ride into my apartment."

Mr Bauer spent $6.65m of the proceeds on an apartement in New York, as well as a home in Boca Raton, Florida, prosecutors claim. Neither Mr Bauer or Mr Kluger could be reached for comment.